Data shows that Bitcoin remains closely related to the stock market
Data shows that bitcoin’s correlation with the stock market has been high in recent months as the crypto has been closely following the S&P 500 and NASDAQ.
Bitcoin continues to mimic the movements of the US stock market in 2022
According to the latest weekly report from Arcane Research, while BTC has been more volatile than the stock market, the cryptocurrency’s moves are still very close to the last.
In 2022 so far, both the stock market and Bitcoin have found it difficult. However, in the year to date, Bitcoin is down 51% while the S&P is down 14% and the Nasdaq is down 22% in the red, well below BTC’s losses.
Here is a chart showing how these assets have performed against each other, and gold, in the first seven months of this year:
Looks like Gold has been the strongest out of these assets during the period | Source: Arcane Research's The Weekly Update - Week 30, 2022
As you can see in the chart above, Bitcoin’s movements over the year so far have been very similar to those of the S&P 500 and NASDAQ.
Despite this, it is also clear from the chart that many of the BTC price movements were much larger than those of the stock market assets.
From this, we can conclude that the relationship between cryptocurrency and stock markets has been very important this year.
The main reason behind the highly correlated markets is the increasing presence of institutional investors in Bitcoin.
During times of total uncertainty, these investors aim to reduce their risk and thus withdraw from markets such as BTC. One of the recent events behind the cryptocurrency’s slump along with the stock market has been the ever-increasing inflation.
The report notes that the increasing importance of monetary and fiscal policy has also strengthened the relationship between not only BTC and the stock market, but also most other financial assets.
Interestingly, gold has outperformed the best of the respective assets for the year, seeing a decline of just 4% over the first seven months.
At the time of writing, the price of Bitcoin is hovering around $23.1K, down 3% in the past seven days. Over the past month, the value of the cryptocurrency has gained 14%.
The chart below shows the currency price trend over the past five days.
The value of the crypto seems to have been moving sideways during the last few days | Source: BTCUSD on TradingView
In recent days, Bitcoin has not shown much price action as the cryptocurrency has mostly been rallying sideways around the $23,000 level.
Featured image from Quantitatives on Unsplash.com, charts from TradingView.com, Arcane Research